Latvian central bank head Ilmars Rimsevics detained

Ilmars Rimsevics (Ernests Dinka, Saeimas Kanceleja, CC BY-SA 2.0)"The Corruption Prevention and Combating Bureau, KNAB, has applied the status of being detained to the Governor of Bank of Latvia", a statement from the cabinet of Maris Kucinskis said.

The ministry did not say who was behind this but drew parallels with campaigns before the US elections in 2016.

"I have not demanded or received any bribes", Rimsevics told a news conference on Tuesday.

Rimsevics said he would remain at his post. Later, in an interview on state television, he reiterated that denial and said he had held meetings with Guselnikov, but only on central bank premises.

The complaint against Rimsevics had come from Norvik Bank, a small Latvian lender, the prime minister said in a statement, adding that Norvik's owners had not provided evidence of wrongdoing despite being "repeatedly asked".

Rimsevics said some commercial banks believed he was behind tough actions by the anti-corruption agency and wanted to see him replaced with someone more compliant. He appeared to soften his stance on Tuesday, however, saying he could not rule out that the bribery allegations were an attempt to damage the reputation of Latvian authorities.

It was not immediately clear whether Rimsevics could continue to sit on the European Central Bank's Governing Council, which sets interest rates for the euro zone.

A spokesman of the Bank of Latvia told EUobserver on Wednesday that it will be represented by deputy governor Zoja Razmusa. The biggest banks, subsidiaries of Nordic heavyweights like Swedbank and SEB, focus on domestic lending, but there are a number of small banks that handle mainly overseas client money.

"In accordance with the decision taken by the authority handling the process, the Bank of Latvia official has been banned from engaging in certain activities related to decision-making, control and supervisory functions at the Bank of Latvia, including holding the office of the bank's head", Dusa said.

FinCEN said non-resident banking in Latvia increased the risk that criminals and shell companies could conduct fraudulent transactions or hide their financial dealings. It called on February 13 for sanctions on ABLV, which it said had "institutionalized money laundering" and helped clients avoid sanctions on North Korea. While the freeze halted deposit outflows, sources close to discussions said ABLV would be given just days to show it can meet its financial obligations.

ABLV sought emergency funding from the Latvian central bank, which bought 13 million euros in bonds and has agreed to provide 97.5 million euros in loans.